Who will control the business when we retire?

Q: We have a family run business and we have three adult children.

My husband and I are at odds in deciding who to put in control when we retire. Our middle child has the most business sense and experience, but it will offend our eldest if we go that way.

They have always gotten along well. We don’t want to disrupt that. How do we make this decision?

A: Technically you are talking about succession planning in a family business.

I appreciate the complexities because you are not only seeking to do what is right for the business, but also to show sensitivity to the relationship between the siblings.

Whatever strategy you choose will depend on how your view your children. Consider the following scenarios:

1) Simply sit down with your children and discuss your concerns. In some families, a frank and open discussion can clear the air as you invite their viewpoints and suggestions;

2) Hire a “succession planner.” These are business consultants, sometimes called business mediators, who can assess your options more broadly and possibly offer creative solutions;

3) Sell the business! Although some owners frown on this, depending on the size of the business, its sale can help to provide long term financial support for your dependents.

I like the idea of hiring a consultant and having a private and confidential meeting with them before introducing any ideas to your children. This may equip you with a more attractive range of solutions.

FYI — with each successive generation, the likelihood of a business remaining in the family diminishes greatly. The statistics I have seen suggest only 30 per cent are successfully transitioned to the second generation and then only 15 per cent to the third. That too is something to discuss!